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GST ACT

The Central Goods and Services Tax Act of 2017, implemented to streamline taxation and curb tax evasion, establishes the framework for the Goods and Services Tax (GST) levied on intra-state and inter-state supplies of goods and services in India.

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What is GST Registration?

what is gst registration?

GST or Goods and Service Tax is a destination-based, multi-stage, indirect tax system. It substitutes for VAT and other collective taxes. GST registration refers to the process of registering a firm under the GST Act of 2017. Post-registration, a 15-digit GSTIN is provided. This helps to share all the operations and data related to the transactions with the authorities. If annual income exceeds ₹40 Lakhs (for goods) and ₹20 lakhs (for services), GST registration is mandatory. Registered businesses can also benefit from input tax credit (ITC) on purchases.

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    Note: This threshold can change from state-to-state, for the latest and accurate information to get in touch with our experts today.

    Importance of GST Registration

    GST registration in India offers many benefits to registered businesses. A taxpayer who registers under the GST Act of 2017 will receive the following benefits:

    • Legal recognition as a provider of goods or services
    • To pay taxes owed on the provision of goods or services, one might claim an input tax credit for taxes paid on acquisitions or procurements
    • There is an efficient flow of input tax credit from suppliers to recipients at the national level
    • They are legally authorised to collect taxes from their customers and transfer the credit of the taxes paid on the goods or services supplied to the purchasers/recipients.

    Benefits of Registering for GST

    Benefits of GST registration in India is as follows:

    legal recognition

    Legal Recognition

    A firm can obtain legal recognition as a supplier of goods or services by registering for GST. This validates the company's legal status as an official entity.

    ITC

    Input Tax Credit (ITC)

    Businesses that are registered can deduct the GST they pay on purchases from the GST they collect on sales by claiming the Input Tax Credit. Consequently, the entire tax liability is decreased.

    Market reach

    Wider Market Reach

    Since the GST is a destination-based tax, there are no limitations on how companies can engage in interstate commerce. This makes it easier for products and services to reach a wider market.

    Competitive advantage

    Competitive Advantage

    Clients usually prefer to work with registered suppliers in order to take advantage of the Input Tax Credit, having a firm that complies with GST can make it more competitive.

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    Business Recognition

    A business's legitimacy and dependability can be increased through GST registration, particularly when interacting with other companies or governmental organisations.

    E-commerce platform

    Access to e-commerce Platforms

    GST registration is mandatory for many e-commerce sites. Having GST registrations up to date provides access to online marketplaces globally.

    GST compliance rating

    GST Compliance Rating

    GST compliance rating  is given by the government according to their GST compliance,Vendors with higher compliance ratings are deemed to be trustworthy by their buyers. This allows them to choose the right vendors that have the best track record of paying their dues on time.

      Documents Required for GST Registration

      Documents Required for GST Registration

      The following documents are required for the GST registration process.

      • Applicant's PAN
      • Aadhaar card
      • Evidence of business registration or Incorporation certificate
      • Promoters/Director's Identity and Address proof with Photographs
      • Business location Address proof
      • Bank Account statement or Canceled cheque
      • Digital Signature
      • Letter of Authorisation or Board Resolution for Authorised Signatory

      GST Registration Eligibility and Threshold Limits

      GST registration is mandatory for businesses that have a turnover of ₹40 lakhs for the sale of goods in normal category states and ₹20 lakhs for the sale of goods in special category states.

      Earlier Limits for Sale of Goods/Providing Services

      Aggregate TurnoverRegistration RequiredApplicability
      Exceeds ₹20 lakhYes – For Normal Category StatesUpto 31 March 2019
      Exceeds ₹10 lakhYes – For Special Category StatesUpto 31 March 2019

      New Limits for Sale of Goods

      Aggregate TurnoverRegistration RequiredApplicability
      Exceeds ₹40 lakhYes – For Normal Category StatesFrom 1 April 2019
      Exceeds ₹20 lakhYes – For Special Category StatesFrom 1 April 2019

      New Limits for Providing Services

      Aggregate TurnoverRegistration RequiredApplicability
      Exceeds ₹40 lakhYes – For Normal Category StatesUpto 31 March 2019
      Exceeds ₹20 lakhYes – For Special Category StatesUpto 31 March 2019

      For Service Providers

      Aggregate TurnoverRegistration RequiredApplicability
      Exceeds ₹20 lakhYes – For Normal Category StatesFrom 1 April 2019
      Exceeds ₹20 lakhYes – For Normal Category StatesFrom 1 April 2019

      Turnover Limits for GST Registration

      Businesses that generate more than ₹40 lakhs in goods sales or ₹20 lakhs in services revenue per year are required to register for GST and pay taxes on their taxable goods and services. Although it is not mandatory, businesses with annual revenue under ₹40 lakhs are free to register for GST. Doing so entitles them to benefits from input tax credit.It is noteworthy that states falling under the special category have a separate minimum threshold, which is ₹10 lakhs for services and ₹20 lakhs for goods. Here is a complete outline of the same:

      Normal Category States/UT Opting for ₹40 lakh Limit

      Kerala, Chhattisgarh, Jharkhand, Delhi, Bihar, Maharashtra, Andhra Pradesh, Gujarat, Haryana, Goa, Punjab, Uttar Pradesh, Himachal Pradesh, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Tamil Nadu, West Bengal, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Andaman and Nicobar Islands and Chandigarh

      Normal Category States Opting for Status Quo

      Telangana

      Special Category States/UT Opting for ₹40 lakh Limit

      Jammu and Kashmir, Ladakh and Assam

      Special Category States/UT Opting for ₹20 lakh Limitss

      Puducherry, Meghalaya, Mizoram, Tripura, Manipur, Sikkim, Nagaland, Arunachal Pradesh and Uttarakhand

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      Did you know? As of 30 November 2023, there were a total of 1,24,59,084 active taxpayers registered for GST across various states and registration types in India. Now you can also register your firm for GST easily through Vakilsearch.

      Mandatory GST Registration for Specific Businesses

      Mandatory GST Registration for Specific Businesses

      Irrespective of the threshold limit GST registration is mandatory for the following:

      • Individuals engaging in interstate taxable supply (with a threshold of ₹20 lakhs/₹10 lakhs applicable for interstate supply of taxable services, specified handicraft goods, and handmade goods)
      • Casual taxable persons involved in taxable supply
      • Individuals obligated to pay tax under reverse charge for received inward supplies
      • Non-resident taxable persons engaged in taxable supply
      • E-commerce entities (inclusive of every e-commerce operator and individuals supplying goods and/or services)
      • Individuals required to deduct tax under Section 51
      • Input service distributor
      • Individuals making taxable supply of goods or services on behalf of other taxable persons, whether as an agent or otherwise
      • Individuals required to pay tax under Section 9(5)
      • Any other individuals or categories notified by the government.

      Step-by-Step GST Registration Process

      Here are 4 steps to complete your GST registration process

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      Step 1

      Get in touch with our experts

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      Step 2

      Provide Business Information

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      Step 3

      Filing for GST Registration

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      Step 4

      Get your GSTIN 

      1. Get in touch with our experts

      Book a slot with our GST experts and resolve all your queries.

      2.Provide Business Information

      Provide the required documents and fill in essential business details such as business name, state, PAN card details for initiating the registration process.

      3.Filing for GST Registration

      Our team will file for GST registration on the online portal on your behalf. You will receive an OTP on filling the forms.

      4.Get your GSTIN

      Our team will provide you with the ARN after successful verification. Subsequently post GST registration the certificate will be provided.

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      All the documents should be submitted within a time frame and accurate as per the government guidelines to avoid delay. The GST certificate will be delivered directly by the Indian government. Vakilsearch will initiate and guide you through the process.

      Types of GST Registration

      Here are few types of GST registered in India:

      gst types

      • Central Goods and Services Tax (CGST) applies to the supply of goods and services within a single state
      • State Goods and Services Tax (SGST) is applicable to the sale of goods or services within the confines of a state
      • Integrated Goods and Services Tax (IGST) is imposed on transactions involving goods and services across state boundaries
      • Union Territory Goods and Services Tax (UTGST) is levied on the supply of goods and services in Union Territories such as Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Lakshadweep, and Chandigarh. UTGST is charged in conjunction with CGST.

      Regular, Casual, and Non-Resident Taxable Persons

      Here is clear outline of regular, casual and non resident taxable persons:

      Regular Taxpayers

      Regular taxpayers under GST are obligated to remit GST once their business turnover surpasses a specified threshold in a fiscal year. Suppliers must register with the state or union when providing goods and services.

      Casual Taxable Person

      A person who periodically engages in business transactions involving the delivery of goods or services, or both, in a state or union territory where they do not have a fixed place of business, whether as a principal, agent, or in any other capacity, is referred to as a casual taxable person.

      Non Residential Taxable Person

      A non-resident taxable person is someone who, while not having a fixed place of business or residence in India, occasionally engages in transactions involving the supply of goods or services, or both, in the course or furtherance of their business, whether as a principal, an agent, or in any other capacity.

      eCommerce Operators and GST

      As per the Goods and Service Tax Act of 2017 all e-Commerce operators should collect the tax at the source of 1% on the cross sales amount of an e-Commerce seller. e-Commerce operators who manage digital or electronic facilities selling goods should register under the Act mandatorily and they are also required to register for TCS.

      GSTIN and It’s Significance

      A GST number, also known as GSTIN, is a unique 15-digit alphanumeric code assigned to each and every registered taxpayer. This provides greater transparency in the GST system, helps in collecting all the GST-related data from the vendors, and prevents tax evasion. The GSTIN plays a crucial role in activities such as availing loans, claiming refunds, simplifying verification processes, making corrections, and understanding one's GST identification number.

      gstin number

      Understanding Your GST Identification Number

      A GSTIN (Goods and Services Tax Identification Number) is a unique 15-digit alphanumeric code assigned to businesses registered under the GST system in India. Here is an example of a GSTIN:

      • Let's break down the structure of a GSTIN:
      • First two digits (State Code): 22 - Represents the state code where the business is registered
      • Next ten digits (PAN): ABCDE1234F - PAN (Permanent Account Number) of the business
      • Next one digit (Entity Code): 1 - Represents the entity code for the PAN holder
      • Next one digit (Blank): Z - Currently kept blank for future use
      • Last one digit (Check Code): 5 - A check code for verification purposes
      Penalties for Non-compliances of GST

      Penalties for Non-Compliance

      Here are the penalties for Non-compliances of GST:

      • Filing GST returns beyond the deadline incurs a late filing penalty
      • Interest is assessed on the outstanding tax amount when GST liabilities are not paid on time
      • Failure to comply with GST regulations may result in the suspension or cancellation of your GST registration
      • The maximum penalty for breaking the GST regulations is ₹25,000. There may be a penalty for each time there is non-compliance. In addition to this fine, the taxpayer can also be responsible for paying interest on any overdue taxes
      Consequences of Not Registering for GST

      Consequences of Not Registering for GST

      Here are some consequences for not registering for GST. The Goods and Service Tax Act of 2017 states that failure to obtain GST registration in India carries a direct penalty that applies even in cases where the registration is submitted after the deadline:

      • Any taxable person who neglects to obtain GST registration despite being required to do so by the act faces a penalty of ₹10,000 or the amount of tax evaded or any short tax due, whichever is greater as per Section 122 of the CGST Act
      • The penalty for not registering for GST is ₹2 lakh or ₹10,000, whichever is higher
      • ₹2 lakh is assessed if an individual does not register for GST.
      GST registration advantages

      Advantages for Businesses with GST Registration

      GST registration offers businesses numerous advantages, establishing legitimacy and ensuring compliance with tax regulations:

      • Registered businesses can claim Input Tax Credit (ITC), reducing overall tax liability, and benefit from simplified interstate transactions under the unified tax system
      • The online filing and payment processes save time and reduce paperwork, while the increased threshold for tax liability exempts small businesses until their turnover surpasses specified limits
      • GST registration enhances credibility, provides access to a wider market, and fosters a competitive edge
      • It streamlines the supply chain, promotes legal protection, and facilitates easier refund processes, contributing to a more transparent and business-friendly environment in India.

      Common Mistakes to Avoid During GST Registration

      Wrong Documentation

      A fundamental error involves neglecting proper record-keeping, whether it pertains to invoices, bills of supply, or purchase records. Maintaining well-organised documentation is crucial for precise GST filing.

      Invoice Detail Inaccuracies

      Mistakes in invoices, such as incorrect Goods and Services Tax Identification Number (GSTIN), wrong invoice numbers, or inaccurate tax calculations, may result in compliance issues and penalties.

      GSTR-2A and GSTR-3B Discrepancies

      Failure to reconcile purchase data (GSTR-2A) with field data (GSTR-3B) can lead to inconsistencies and compliance issues.

      Missing GST Return Deadlines

      Late GST return filing incurs penalties. Staying informed about due dates and filing returns punctually is crucial.

      Unverified GSTIN of Suppliers

      Validating suppliers' GSTIN through the GST portal is essential. Incorrect or fake GSTINs can result in denial of input tax credit.

      Inadequate Understanding of GST Composition Scheme

      Lack of comprehension about the intricacies of the GST Composition Scheme can lead to inaccurate filings.

      Neglecting GST Notices and Compliance

      Ignoring GST notices or compliance requirements can result in legal issues and substantial penalties. Addressing them promptly is essential.

      Different Categories Which Requires GST Registration

      Different Categories Which Requires GST Registration

      Below listed categories are required to register GST

      • Education and Learning
      • Health and Wellness
      • Electricity, Water and Local services
      • Money and Taxes
      • Jobs
      • Justice, Law and Grievances
      • Travel and Tourism
      • Business and Self-employed
      • Births, Deaths, Marriages and Child care
      • Pension and Benefits
      • Transport and Infrastructure
      • Citizenship, Visas & Passports
      • Agriculture, Rural and Environment
      • Science, IT and Communications
      • Youth, Sports and Culture
      • Essential Government Services during Pandemic
      • Art & Culture
      • Communication
      • Defence
      • Home Affairs & Enforcement
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      How to Obtain Expert Assistance for GST Registration in Vakilsearch?

      Vakilsearch stands out as a reliable choice for GST registration with its efficient and streamlined process. Our platform offers a user-friendly interface, simplifying the often intricate GST registration procedure. Vakilsearch's expert team ensures accurate documentation and compliance with regulatory requirements, providing a hassle-free experience for businesses. With a commitment to delivering prompt and reliable services, Vakilsearch emerges as a trusted partner for businesses seeking seamless GST registration assistance

        GST Registration FAQs

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        Can I register for GST voluntarily if my turnover is below the threshold?

        Yes, you can voluntarily register for GST even if your turnover is below the threshold. It might be beneficial for availing input tax credits and participating in interstate transactions, improving your business credibility

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        What are the penalties for not registering for GST on time?

        Penalties for not registering for GST on time include late fees and interest charges. It's crucial to adhere to registration deadlines to avoid financial implications and ensure compliance with tax regulations.

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        What is the difference between the effective date of GST registration and the date of GST registration?

        The effective date of GST registration is when you become liable to pay GST, while the date of registration is when you are officially registered. Understanding this difference is important for determining when your GST obligations commence.

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        Is issuing a tax invoice and tax collection mandatory for voluntary GST registration?

        Yes, issuing a tax invoice and tax collection is mandatory for voluntary GST registration. Even if your turnover is below the threshold, compliance with invoicing and collection requirements is necessary to meet legal obligations and maintain transparency in your transactions.

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        Can I avail input tax credit against a 5% GST liability for goods sold by my LLP?

        No, input tax credit cannot be availed against a 5% GST liability for goods sold by your LLP. Input tax credit is typically applicable for higher tax rates, and the limited 5% tax rate may not provide eligibility for claiming input tax credit in this scenario.

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        What should a business do about GST when not registered and dealing with GST-charging entities?

        If not registered for GST and dealing with GST-charging entities, consider registering to avail input tax credits. Without registration, businesses might bear the entire tax burden, impacting profitability.

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        How to resolve error code SB001 in GST export through ICEGATE?

        Resolve GST export error code SB001 on ICEGATE by verifying data accuracy, ensuring proper document submission, and seeking assistance from ICEGATE or GST support for technical guidance.

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        How to deal with negative amount errors in GSTR3B due to credit notes?

        To address negative amount errors in GSTR3B due to credit notes, rectify the values, report corrections in subsequent returns, and maintain accurate documentation to reconcile discrepancies.

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        How to handle GST compliance if my GSTIN was cancelled and I didn’t file the final return?

        If your GSTIN was cancelled without filing the final return, rectify by filing the pending return immediately. Failure to do so can lead to penalties and compliance issues.

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        What is the GST Annual Return?

        The GST Annual Return is a summary of a taxpayer's financial activities for a fiscal year, including details of sales, purchases, and taxes paid. It provides a comprehensive overview of the taxpayer's GST transactions.

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        What is the HSN Code?

        The HSN Code, or Harmonised System of Nomenclature, is a standardised coding system for classifying goods internationally. It simplifies the identification of products for tax and regulatory purposes, aiding in smooth trade.

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        What is the full form of SAC Code?

        The full form of SAC Code is ‘Service Accounting Code.’ It is a system of classification for services under GST, helping in uniform taxation and simplifying compliance for service providers.

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        Can a salaried person apply for GST?

        Yes, a salaried person can apply for GST registration if involved in business activities beyond their employment. Registering is mandatory if the aggregate turnover exceeds the prescribed threshold.

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        What is an E-way Bill?

        An E-way Bill is a document required for the movement of goods worth over a specified value between different states. It ensures tax compliance and facilitates the smooth transportation of goods by providing details about the consignment.

        Authors

        Written by

        Akash,

        Reviewed by

        Anakha

        . Last updated on

        May 22 2024